HR 3892
Flow Act
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Bill overview
This bill, the Financing Lead Out of Water Act, modifies how bonds used for replacing lead service lines are treated for tax purposes. Specifically, it clarifies that replacing privately-owned portions of lead service lines to comply with federal drinking water regulations qualifies as ‘qualified lead service line replacement use,’ which is not considered ‘private business use’ for bond financing. This change aims to make it easier for municipalities to secure financing for lead service line replacement projects. The bill takes effect on January 1, 2026.
Key provisions
- Defines ‘qualified lead service line replacement use’ as replacing privately-owned lead service lines to meet federal lead drinking water regulations.
- States that ‘qualified lead service line replacement use’ does not constitute ‘private business use’ for bond purposes.
- Specifies that ‘lead service line’ is defined by the Safe Drinking Water Act.
- Defines ‘national primary drinking water regulation for lead’ as a regulation under the Safe Drinking Water Act.
- Establishes ‘public water system’ as defined by the Safe Drinking Water Act.
Who is affected
- Public water systems
- Municipalities
- Bond issuers
- Water utilities
- Taxpayers
Notable changes
- Changes the definition of ‘private business use’ related to bond financing for lead service line replacement projects.
- Creates a specific category of ‘qualified lead service line replacement use’ for tax purposes.
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119th CONGRESS — 1st Session
H. R. 3892
IN THE HOUSE OF REPRESENTATIVES
A BILL
To amend the Internal Revenue Code of 1986 to modify the private business use requirements for bonds issued for lead service line replacement projects.
This Act may be cited as the Financing Lead Out of Water Act of 2025 Flow Act
, or the
.
qualified lead service line replacement usemeans, with respect to any public water system, use of the proceeds of an issue to replace any privately-owned portion of a lead service line connected to such system to facilitate, achieve or maintain compliance with a national primary drinking water regulation for lead.
lead service linehas the meaning given such term in section 1459B(a)(4) of the Safe Drinking Water Act, as amended.
national primary drinking water regulation for leadmeans a national primary drinking water regulation for lead promulgated under section 1412 of such Act.
public water systemhas the meaning given such term in section 1401(4) of such Act.
The amendments made by this section shall apply to obligations issued after December 31, 2025.